Mastering Nifty 50 Options Strategies: Straddle, Strangle, Bull & Bear Spreads Explained

 Options trading in Nifty 50 allows traders to profit from volatility, directional moves, or range-bound markets. Strategies like Straddle, Strangle, Bull Spread, and Bear Spread are widely used. By combining these with candlestick patterns, traders can refine entries and exits.

Assumption:

• Current Nifty 50 = 25400 (ATM)

• Expiry = 27 Jan 2026

• CE Premium = ₹150

• PE Premium = ₹120

• Lot size = 65 contracts/ Qty.

A) Long Straddle (Volatility Play)

• Setup: Buy 25400 CE @ ₹150 + Buy 25400 PE @ ₹120

• Total Premium Paid: (150 + 120) × 65 = ₹17,550

• Breakeven Points:

  • Upside: 25400 + 270 = 25670

  • Downside: 25400 – 270 = 25130

• Profit Example:

  • If Nifty goes to 26000 → CE intrinsic = 600, PE = 0 → Net = (600 – 270) × 65 = ₹21,450 profit

  • If Nifty goes to 24800 → PE intrinsic = 600, CE = 0 → Net = (600 – 270) × 65 = ₹21,450 profit

• Risk: Limited to premium paid = - ₹17,550.

• Best Use: Expecting big move either way.

B) Long Strangle (Cheaper Volatility Play)

• Setup: Buy 25600 CE @ ₹100 + Buy 25200 PE @ ₹90

• Total Premium Paid: (100 + 90) × 65 = ₹12,350

• Breakeven Points:

  • Upside: 25600 + 190 = 25790

  • Downside: 25200 – 190 = 25010

• Profit Example:

  • If Nifty goes to 26000 → CE intrinsic = 400, PE = 0 → Net = (400 – 190) × 65 = ₹13,650 profit

  • If Nifty goes to 24800 → PE intrinsic = 400, CE = 0 → Net = (400 – 190) × 65 = ₹13,650 profit

• Risk: Limited to premium paid = - ₹12,350.

• Best Use: Expecting volatility but want lower cost than Straddle.

C) Bull Call Spread (Moderate Uptrend)

• Setup: Buy 25400 CE @ ₹150 + Sell 25800 CE @ ₹60

• Net Premium Paid: (150 – 60) × 65 = ₹5,850

• Max Profit: (25800 – 25400 – 90) × 65 = ₹20,150

• Profit Example:

  • If Nifty goes to 25800 → CE intrinsic = 400, short CE intrinsic = 0 → Net = (400 – 90) × 65 = ₹20,150 profit

• Risk: Limited to premium paid = - ₹5,850.

• Best Use: Expecting moderate upward move.

D) Bear Put Spread (Moderate Downtrend)

• Setup: Buy 25400 PE @ ₹120 + Sell 25000 PE @ ₹50

• Net Premium Paid: (120 – 50) × 65 = ₹4,550

• Max Profit: (25400 – 25000 – 70) × 65 = ₹21,450

• Profit Example:

  • If Nifty goes to 25000 → PE intrinsic = 400, short PE intrinsic = 0 → Net = (400 – 70) × 65 = ₹21,450 profit

• Risk: Limited to premium paid = - ₹4,550.

• Best Use: Expecting moderate downward move.

E) Iron Condor (Range-Bound Market)

• Setup: Sell OTM Call + Buy higher OTM Call; Sell OTM Put + Buy lower OTM Put.

• Risk/Reward: Limited risk, limited reward. Works best when Nifty stays in a defined range.

• Lot Size Impact: Premiums collected × 65 → small but consistent profits if Nifty remains range-bound.

F) Butterfly Spread (Low Volatility Play)

• Setup: Buy 1 ITM Call + Sell 2 ATM Calls + Buy 1 OTM Call.

• Risk/Reward: Low cost, limited profit. Best when expecting minimal movement.

• Lot Size Impact: Payoff is magnified × 65 contracts.

Above mentioned RISK is the Maximum Loss in each strategy defined as the total premium paid (or net debit), assuming the position is held till expiry and Nifty expires within the non-profitable range. It is not based on stop-loss triggers or intraday movements.

How Maximum Loss Is Calculated:-

• For debit strategies (e.g., Straddle, Strangle, Bull/Bear Spreads), Maximum Loss = Net Premium Paid × Lot Size

• For credit strategies (e.g., Iron Condor, Short Straddle), Maximum Loss = Difference in strike prices – Net Premium Received × Lot Size

Key Takeaways

• Straddle/Strangle: High volatility strategies, unlimited profit potential, risk = premium paid.

• Bull/Bear Spreads: Directional strategies with capped profit and capped loss.

• Iron Condor/Butterfly: Range-bound strategies, low risk, low reward.

• Lot Size (65 contracts): Always multiply premiums and payoffs by 65 to get actual exposure.